Suttles v. Associated Mortgage Companies

• Decision Date: 10 September 1941
• Docket Number: 13814.
• Citation: Suttles v. Associated Mortgage Companies, 193 Ga. 78, 17 S.E.2d 272 (Ga. 1941)
• Parties: SUTTLES, Tax Collector, v. ASSOCIATED MORTG. COMPANIES, Inc.
• Court: Georgia Supreme Court

17 S.E.2d 272

193 Ga. 78

SUTTLES, Tax Collector, v. ASSOCIATED MORTG. COMPANIES, Inc.

No. 13814.

Supreme Court of Georgia

September 10, 1941

Rehearing Denied Nov. 13, 1941.

The Associated Mortgage Companies, a corporation chartered under the law of Maryland, instituted an action to enjoin enforcement of three tax executions issued by the tax collector of Fulton County, for State and county taxes for the years 1935, 1936, and 1937, on assessments against credits secured by real estate, being the notes and mortgages hereinafter described.

The assessments and the executions based thereon were attacked on the ground that the notes and mortgages did not have a taxable situs in this State. The tax collector filed an answer, denying this contention, and asserting validity of the tax executions. After hearing evidence the judge granted an interlocutory injunction, and the tax collector excepted.

The following facts appeared: Before 1934, the Security Mortgage Company, a Georgia corporation, conducted a loan business in Fulton County. The loans made by it were secured by mortgages on Georgia real estate. The notes and mortgages were placed in trust with the Citizens & Southern National Bank of Atlanta, as security for bonds issued and sold by the Mortgage Company. The bonds were based on a trust indenture executed by the Security Mortgage Company to Citizens &amp Southern National Bank as trustee, and the notes and mortgages were transferred to the trustee as further security for such bonds. As a result of the depression which began in 1929, the greater portion of the loans depreciated in value. Many of the debtors or mortgagors defaulted in payment of interest and taxes, thus forcing the mortgage company to pay large sums of money as taxes on the mortgaged real estate in order to prevent the properties from being sold. The situation grew worse until the Security Mortgage Company was threatened with collapse.

In 1933 and 1934, parties at interest, with the co-operation of Reconstruction Finance Corporation, worked out a refunding plan under which holders of bonds of Security Mortgage Company and other companies similarly situated were given the opportunity of exchanging their bonds for cash and securities to be issued by the Associated Mortgage Companies, which as a part of the plan was organized in Maryland on September 28 1934, with corporate powers in part as follows: (a) To engage in the business of a mortgage corporation. (b) To carry on and conduct business of acquiring and obtaining loans secured by mortgages on real estate in any of the States of the United States. (g) To carry on or participate with others in the financing, liquidation, or reorganization of corporations engaged in any lawful business enterprise. (j) To cause legal title and/or any estate or interest in property owned by the corporation, to be vested in or registered in the name of or operated by any association or corporation formed or to be formed either upon trust for or as agents or nominees of this corporation. (o) To purchase, own, hold sell and otherwise dispose of property, subject to laws of State where located. (q) To acquire property and business of any person, firm, association, or corporation, engaged in similar business.

Substantially all bondholders of Security Mortgage Company deposited their bonds under this refunding plan. Associated Mortgage Companies exchanged these bonds for notes and mortgages which had been taken for loans made by the Security Mortgage Company. This exchange was consummated with the mortgage company and the trustee, Citizens & Southern National Bank of Atlanta, on October 10, 1934. The negotiations with the mortgage company and the trustees were handled by Associated Mortgage Companies from Baltimore, and the only acts performed in the State of Georgia were those connected with the physical transfer and delivery. The trust indenture made by the mortgage company to the trustee and the notes and mortgages were all transferred in writing and delivered to Associated Mortgage Companies, or to another for it, in this State. There were originally 215 of such notes and mortgages the total principal amount of which was about $650,000. These and the trust indenture, on direction of Reconstruction Finance Corporation, were immediately transmitted to the Baltimore branch of the Federal Reserve Bank of Richmond, Virginia. Thereafter the notes and mortgages were kept in Baltimore, except when needed in Fulton County for cancellation, renewal, extension or...